Various embodiments of this disclosure relate to dynamic pricing and, more particularly, to determining a lowest price of a product that is dynamically priced by an online vendor.
Online vendors have great flexibility in their charging models because they are not restricted to a fixed price display for their products. Rather, the website of the vendor can dynamically modify the price. Some vendors dynamically alter prices by estimating the maximum amount each customer is willing to pay and attempting to offer to each customer his or her highest acceptable price.
A typical example of this occurs in the pricing of airline tickets. It is generally agreed that business passengers are willing to pay more, since their travel is required for their work. Business customers tend to travel during the business week. Thus, ticket vendors often charge less for flights that involve a weekend, thus offering lower prices to those who are likely traveling for leisure and therefore might be less likely to fly if prices are too high. Some airline ticket vendors additionally sell customers the privilege of been seated together in a group. In that case, the ticket vendor may select seat assignments for a set of tickets, where the seat assignments are based on a default seating algorithm. The ticket vendor may then offer to group the seat assignments together for an additional cost. This additional cost may be based on the estimated price sensitivity of the customer.
As online vendors become more sophisticated, they are examining more than just the for-sale product itself when determining prices. For instance, a vendor might consider various factors, such as: customer behaviors in an online store, quantity of times the customer entered and left the store, the customer's geographic location, characteristics about the customer's computer, or other factors. In one reported case, owners of a first type of computer were charged more for the same good as compared to owners of a second type of computer. This is because retailers believed that owners of the first type of computer were price insensitive. Practices such as this are legal for online vendors in the United States and, for customers, may be difficult to identify and act upon.